High-flying IPO stocks sell off after quarterly results

The Zoom Video Communications logo is pictured at the NASDAQ MarketSite in New York

By Noel Randewich

SAN FRANCISCO (Reuters) – Three of Wall Street’s top-performing IPO stocks in 2019 tumbled late on Thursday after the companies’ quarterly results failed to satisfy investors and justify their high valuations.

Zoom Video Communications <ZM.O> dropped 4% in extended trade, even after the videoconferencing provider’s quarterly results and full-year outlook beat analysts’ expectations.

Cyber-security company Crowdstrike <CRWD.O> tumbled 8% after it reported better-than-expected results and gave upbeat quarterly guidance.

And business software seller Medallia <MDLA.N> tumbled 13% after its results also beat analysts’ average expectations.

In a year marked by disappointing public listings by Uber Technologies <UBER.N> and Lyft <LYFT.O>, the stock performances of Zoom, Medallia and Crowdstrike have stood out since their IPOs.

Prior to Thursday’s after-hours declines, Zoom was up 157% from its initial public offering in April, Crowdstrike had risen 155% since it went public in June, and Medallia was up 74% from its IPO in July.

The sell-offs on Thursday, even after the money-losing companies beat consensus expectations, suggest investors may be becoming more concerned about high valuations.

Crowdstrike traded earlier on Thursday at about 85 times expected earnings for the next 12 months, while Medallia traded at a multiple of 37, according to Refinitiv data.

Zoom traded at 38 times expected revenue over the next 12 months. Analysts on average do not expect Zoom to report a non-GAAP profit until the quarter ending in October 2020.

Uber is down 28% since its May IPO, which had easily been this year’s most highly anticipated. It is now widely viewed as the most disappointing, while Lyft has slumped 36% from its March IPO.

Slack Technologies Inc’s <WORK.N> stock price more than doubled on its first day of trading in a direct listing on June 19, but has steadily fallen since then. On Friday, Slack closed just 15% above the reference price used in its listing.

(Reporting by Noel Randewich; Editing by Richard Chang)

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